Revised EVMS Threshold Requirements

Written by Michael Breuker | Tuesday, July 25, 2017

Update: August 26, 2024.
Please note that the article below refers to the implementation of a DFAR deviation implemented in 2017 that effectively changed the EVMS validation threshold for DOD cost-plus development contracts to $100M, while keeping EVMS reporting threshold at $20M. The 2024 NDAA directs the Dept of Defense to update the DFAR to raise the reporting threshold to $50M, and officially change the validation threshold to $100M. DFARs changes take a long time, and we will post additional information when changes are made.

At the most recent NDIA Integrated Program Management (IPM) Division Meeting, John McGregor, Director of Earned Value Management for OSD Performance Assessment & Root Cause Analysis (PARCA) took the stage to discuss the latest updates related to EVM threshold requirements for DoD contracts. During the presentation, John clarified that DoD Instruction 5000.02 is finalized, signed and in full affect, even though the document looks like it may be in draft form.

Some key changes to the EVM language in this version are:

EVM shall apply when a contract is Cost Plus or Incentive, is at least $20M in value, and has at least 18 months of performance (increased from 12 months)
For IDIQ and similar types of contracts in which task orders, or their equivalent, are issued, EVM is applied based on “like kind” efforts. In other words, “like kind” task orders are managed together as a single project and if the total of these together meets the above criteria, EVM will apply. This helps clarify these types of contracts tremendously, but still leaves a lot of room for interpretation.

Civilian agencies tend to follow closely behind the DoD when it comes to EVM policy, and NASA is often the first agency to make the changes. As such, Jerald Kerby (NASA Director of EVM) reported that the NASA FAR Supplement (NFS) has been updated and submitted to Office of Management and Budget (OMB) for comment. It includes the following EVM applicability updates, consistent with the DoD instruction 5000.02:

Threshold for non-validated EVM changed from $20 - $50M, to $20M - $100M
Period of performance changed from 12 months to 18 months
Changed language from “contracts” to “contracts, task and delivery orders”
Added language for “Development work scope”

These changes are intended to prevent contracting officers from placing EVM requirements on contracts where EVM does not provide significant management value (such as services and production contracts) as well as reduce the overall burden to the contractor and cost to the government associated with validations. This does not mean that good Integrated Program Management (IPM) principles should not apply to contracts that don’t meet these new thresholds. It is very likely that some level of tailored IPMR reporting will still be required on smaller contracts, so that government program offices can integrate and analyze cost and schedule data for the program.

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